Centralization and Decentralization

Knowledge Center

   

Changing the decision-making authority and the corresponding organizational structure.

Contents

Premium

Centralization and DecentralizationCentralization and Decentralization? Description

An organization has to make strategic and operational decisions. Where and by whom should these decisions be made? And: how should the organization structure be adapted? Centralization and Decentralization are two opposite ways to transfer decision-making power and to change the organizational structure of organizations accordingly.

 

Centralization:

  • Definition: The process of transferring and assigning decision-making authority to higher levels of an organizational hierarchy.
  • In a centralized organization, the decision-making has been moved to higher levels or tiers of the organization, such as a head office, or a corporate center.
  • Knowledge, information and ideas are concentrated at the top, and decisions are cascaded down the organization.
  • The span of control of top managers is relatively broad, and there are relatively many tiers in the organization. Compare: Fayol.

Decentralization:

  • Definition: The process of transferring and assigning decision-making authority to lower levels of an organizational hierarchy.
  • In a decentralized organization, the decision-making has been moved to lower levels or tiers of the organization, such as divisions, branches, departments or subsidiaries.
  • Knowledge, information and ideas are flowing from the bottom to the top of the organization.
  • The span of control of top managers is relatively small, and there are relatively few tiers in the organization, because there is more autonomy in the lower ranks.

Three Forms of decentralization

  • Deconcentration. The weakest form of decentralization. Decision making authority is redistributed to lower or regional levels of the same central organization.
  • Delegation. A more extensive form of decentralization. Through delegation the responsibility for decision-making is transferred to semi-autonomous organizations not wholly controlled by the central organization, but ultimately accountable to it.
  • Devolution. A third type of decentralization is devolution. The authority for decision-making is transferred completely to autonomous organizational units.

Strengths of Centralization. Characteristics

  • Philosophy / emphasis on: top-down control, leadership, vision, strategy.

  • Decision-making: strong, authoritarian, visionary, charismatic.

  • Organizational change: shaped by top, vision of leader.
  • Execution: decisive, fast, coordinated. Able to respond quickly to major issues and changes.
  • Uniformity. Low risk of dissent or conflicts between parts of the organization.

Strengths of Decentralization. Characteristics

  • Philosophy / emphasis on: bottom-up, political, cultural and learning dynamics.
  • Decision-making: democratic, participative, detailed.
  • Organizational change: emerging from interactions, organizational dynamics.
  • Execution: evolutionary, emergent. Flexible to adapt to minor issues and changes.
  • Participation, accountability. Low risk of not-invented-here behavior.
Centralization and Decentralization Special Interest Group


Special Interest Group (328 members)


Centralization and Decentralization Forum  

Recent topics

  The Role of Decentralization in Developing Countries
Improving the communication in development projects in developing countries is very important. Because one major reason for the slow pace of progress ...
     
 
  Similarities Between Centralization and Decentralization?
I'm looking for similarities between centralization and decentralization. What do they have in common? I will be grateful for your tips and ideas....
     
 
  Centralization and Decentralization of Political Systems
Were the structures presented by centralized and decentralized political systems in Africa suitable for their administration? Why were they preferred ...
     
 

Best Practices - Centralization and Decentralization
  Benefits of Decentralization. Advantages
1. Greater transparency and accountability.
2. Quick decision making, no long processes
3. Local problems get local solutions.
4. Great...
     
 
  When is Centralization of Decision-making Better?
Please tell me the circumstances under which centralization is better than decentralization? Thanks...
     
 
  Ricardo Semler: Democratization Instead of Decentralization
Decentralization has been around for very long, but with protracted results due to top-down hierarchical organization structures. Decentralization is ...
     
 
  Decentralization Better for Small Businesses?
Decentralization argument works for large businesses. For a small business, it is better to have centralization. Do you agree? Explain....
     
 
  Centralized & Decentralized Organisation
An idea would be to include comments and examples on the effects of managing shareholder wealth, stakeholders and the ability to add bottom line effic...
     
 
  The link between Centralization and Decentralization to Public Administration
What is the link between Centralization and Decentralization to Public Administration...
     
 



All you need to know about management


  Divisions Versus Subsidiaries
I need some clarification of what is the difference between divisions and subsidiaries. Is there any significant distinction? In the decision m...
     
 
  Crisis: Centralization or Decentralization?
In a crisis situation, which one is better: centralized or decentralized? On one hand in a crisis condition urgent decisions regarding actions have to...
     
 
  Decision-making in Germany
Would you say Germany typically has centralized or decentralized decision making?...
     
 
  Types of Decentralization. Categories
I am looking for a further classification of decentralization types? Do you have a list of forms of decentralization? Please share them and give an ex...
     
 
  Direct Communication in Decentralization
Is it possible that in decentralization the first line manager communicates directly with top management?...
     
 
  Decentralization to Local Government
What is the importance of decentralization to local government?...
     
 
  Implications of Delegation
How can one evaluate the implications of delegation in private companies, NGOs, and public companies?...
     
 
  Decentralization Requires Involvement and Empowerment
Decentralization is preferred to centralization in many cases. But decentralized systems need to look at involving each individual at the decentralize...
     
 

Expert Tips - Centralization and Decentralization
 

Centralization and Decentralization

 
 
 

Key Considerations in Deciding Upon your Organizational Design

 
 



Advance yourself in business administration and management



Resources - Centralization and Decentralization

Organization Design

 

Organizations and Structures

 

Centralization and Decentralization Diagram

 
 

News about Centralization Decentralization


     
 

News about Transferring Decision-making Authority


     
 

Videos about Centralization Decentralization


     
 

Videos about Transferring Decision-making Authority


     
 

Presentations about Centralization Decentralization


     
 

Presentations about Transferring Decision-making Authority


     
 

Books about Centralization Decentralization


     
 

Books about Transferring Decision-making Authority


     
 

More about Centralization Decentralization


     
 

More about Transferring Decision-making Authority


     



Accelerate your management career



Compare with Centralization and Decentralization: Parenting Advantage  |  Parenting Styles  |  Core Competence  |  Organization Chart  |  14 Principles of Management  |  Bases of Social Power  |  Growth Phases  |  Organizational Configurations  |  Acquisition Integration Approaches  |  Business Process Reengineering  |  Chaos Theory


Return to Management Hub: Change & Organization  |  Decision-making & Valuation  |  Knowledge & Intangibles  |  Leadership  |  Strategy


More Management Methods, Models and Theory

Special Interest Group Leader

 
 


About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2018 12manage - The Executive Fast Track. V15.0 - Last updated: 15-12-2018. All names ™ of their owners.